Loans: Why Now is a Good Time to Refinance Your ARM Loan... ARA Content

(ARA) - With gas prices in a state of constant flux, and energy costs going up and down too, the last thing you want to happen is for your mortgage to start fluctuating too. But if you have an adjustable rate mortgage (ARM), it will soon happen.

Interest rates are on the rise, and the millions of homeowners who took advantage of rock bottom interest rates in 2003 and 2004 by either refinancing or buying a new home with an ARM loan -- one that starts at a low introductory rate during a three-to-five-year "freeze" period -- are in for a shock. Interest rates on at least half of the $2 trillion in ARM loans obtained since 2003 could soon increase more than 2 percent.

Say you took out a loan for $200,000 at 4 percent on January 1, 2003. As of January 1, 2007, you'll owe $185,027.12 in the principal, and when your interest rate jumps from 4 to 6 percent, your payments will go from $954.83 to $1172.47 - a $217.64 increase.

Few people can afford to pay that much more per month for their living expenses, so now is a good time to start looking into your options. Number one on the list should be to see what will happen if you refinance. Even if you have a 2 percent rate increase cap on your arm, you will still save money by moving into a fixed rate mortgage at today's current rates and not have to worry about future rate increases.

At what is likely a stressful time in your life, the last thing you want to do is go from bank to bank shopping around for the best rate. Log on to www.nationalhomesavings.com, fill out their quick and easy online form, and lenders interested in your business will contact you. In addition to connecting you with lenders, the site also offers a mortgage calculator and a collection of informative articles.